Monopoly Vs. Competition This Paper Term Paper

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A few years ago there were congressional hearings about the accusation against the larger airlines actively working to shut out any smaller newcomer to certain hubs around the world.

While the ability and willingness of incumbent airlines to respond to competitive entry is central to competition, at some point that response may cross the line of fair competition and become an unfairly exclusionary practice intended to drive the entrant from the market. When that happens, the result is insufficient competition to discipline the incumbent with resulting higher fares and possibly lower service compared with a situation where the entry had been successful (Clinton, 1998)."

In this situation congress agreed that the larger airlines were purposely driving the smaller ones out of hubs by price gouging and they were ordered to stop.

CONCLUSION

The airline industry is an extremely fickle market. One day prices may be through the roof, while the next day they may plummet below expectations.

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While these variances in prices can be exasperating for customers, if it is occurring due to honest, healthy competition there is little to be done about it. However, if it is occurring because a large strong airline is trying to force out the smaller lower, fare airlines it is against anti-trust laws, and can be stopped. The problem with allowing monopolies is that in the end the customer pays the price by making up the revenue that was lost during the price war by having prices doubles or tripled once that price war has ended.

Competition among airlines, on the other hand, can benefit consumers with lower rates, stepped up customer service and the attempt to win the customer back during their next need for a flight......

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